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Yahoo targets European mobile users
Tuesday, August 06 2002
by Matthew Clark


US Internet giant Yahoo said on Tuesday it had acquired a 15 percent stake in
European wireless portal Sonera Zed.



The two firms declined to put a value on the deal, though early speculation has
pegged Yahoo's cash outlay for the purchase at around EUR15 million. Moreover,
Yahoo said it has the option to acquire 100 percent of Sonera Zed over the next
two years or withdraw from the transaction altogether.



Sonera Zed, a privately held unit of Finnish telecoms operator Sonera, provides
entertainment, communication and information services for mobile devices, mainly
by text messaging (SMS) and in some markets by Wireless Application Protocol
(WAP), via direct relationships with 17 operators in six countries, including
Germany, Italy, Malaysia, the Philippines, Suomi and the UK. 



Much of what Zed offers consists of ringtones, logos, picture messages, games and
chat services, as well as news and entertainment-based content. As of June 2002,
the business had an average of 3 million customers per month, who execute
approximately 30 million commercial transactions per month, the firm claims. 



Yahoo said it purchased the stake in order to drive "long-term profitable
growth," particularly in Europe where consumer use of mobile content is
predicted to more than quadruple in revenues in the next four years to more than
USD2.9 billion by 2005, Yahoo pointed out. 



Indeed, Yahoo said the co-branded mobile services the two firms will launch in
the wake of the deal will be rolled out in the UK, Germany and Italy initially.
The companies also hope to expand their services to additional Yahoo Europe
properties in the future. Alongside the ringtones, picture messages and content
services Zed is already providing, Yahoo said it planned to introduce its instant
messaging platform Yahoo Messenger and Yahoo Mail to mobile customers in these
markets. 



"We have identified the mobile space as a potential key driver of growth for
our international operations," said Terry Semel, chairman and chief executive
officer of Yahoo in a statement. "By building a relationship with an
established Mobile Value Added Service provider, with a top-quality
infrastructure, we believe that we will be well positioned to provide services to
consumers that they desire, while also creating a consumer pay platform in
Europe."



According to a filing with the SEC in the US, Zed's sales rose to EUR11 million
last quarter, from EUR5 million a year earlier. The company's loss before
interest, taxes and some other costs last quarter narrowed to EUR8 million from
EUR40 million in the same period a year earlier. Sonera is Finland's largest
phone company and is in the process of being bought by Sweden's Telia.